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What To Do When a Megacorp Wants To Buy You?
Anonymous Entrepreneur writes "I run a small technology startup company; so small that our offices are still located in a room in my home. We are just some young friends, fresh from college, and we haven't started having regular sales, as 99% of our time is invested in development. A large corporation has just approached us, trying to persuade us to sell our company. The money is fair enough, and the employment conditions would seem excellent, since they would enable us to manage good-sized motivated teams, but we are very emotionally attached to our development and we place great importance to being independent. We founded our company because we didn't want to follow rules. We wanted to be the ones who make the rules instead. Money really doesn't mean much to us as long as we can do whatever we want while excelling at our passions. We feel that by accepting the offer, we couldn't achieve the maximum of our potential, and one of us joked that if we get in contact with the corporate environment and accept their money, we risk becoming lazy. Another member is more pragmatic, saying that accepting some money now is better than waiting for the development to go gold, even though all of us agree that if we finished our thing, we'd earn more than what the corporation has offered us. We would be very interested to know your thoughts and viewpoints, especially if you have ever faced a similar dilemma."
You have given us nothing to go on here as far as your business case, so I'll be brief:
Money really doesn't mean much to us as long as we can do whatever we want [...]
The first you will learn about money is that it lets you do exactly that. Make sure it's enough that in case things don't work out with Megacorp, you can get back to doing whatever it is you enjoy.
From what you wrote, there does not seem to be any real question in (most) of your minds as to what to do, so not really sure what you are asking.
Please don't be one of those "I'm asking for advice, though I really just want affirmation" people.
if it is your dream to see you idea into fruition then be prepared for it to be raped and then brutally murdered.
you will loose any control that you have, and even if you can leave the company you still won't be able to do anything since they own your idea.
all that they care about is profit margin, and the very second that it looks like it won't be profitable, they'll kick your ass to the curb and bury your project in the basement.
finish your product, then decide if you want to sell. you will have much more control over the end result that way.
If the money's good, take the money. You can always start another business but you can't always find someone willing to pay you for your current one.
Remember: you don't have to be the next Google. It only takes a few million to retire and to *anything you want to do.*
Moderating "-1, Disagree" is simple censorship. Have the guts to post your opinion.
When a company wants to buy you, it means you are competitors otherwise and they want to stop you or otherwise control your future.
Make it clear what their expected terms are to be and whether or not you will be forced into a non-compete situation. They will bring you on as an employee as part of the agreement and at that point "all your IP are belong to us." You stand to lose plenty. And let's be clear on this -- they will hire you, but that is NO guarantee that they won't turn right around and fire you leaving you with no options for "starting up again" or working for another company doing anything similar -- remember that "non-compete" thing they required you to sign?
They have a PLAN. Make no mistake about it. They have thought this through. You should give this no less thought. Get them to disclose their ENTIRE plan to you at once including their intent to terminate you leaving you high and dry. (Of course they will never say that, but you can get them to state that they never had any such intention AND that in the event they feel they need to in the future that you have a golden parachute and get it in writing.)
If your primary interest is autonomy/creativity, then it really comes down to what they are actually trying to buy. If they are buying your company to get your product(s); then sell, sell, sell. The more money you have, the easier it will be for you to pursue whatever projects/new startups/etc. you feel like doing in the future.
If they are buying your company to get you, then the situation is less clear. If a condition of the buy is you working for the man for a fair while, then you might not want to do that.
Somebody doesn't watch The Office.....
Take the money if it's anything reasonable. You then have some resources to enable you to work on things that make you feel more free.
But seriously, take the money while the offer is there.
I see you work for Compuglobalhypermeganet, huh? That was a pretty vague writeup. I'd say advice would be "Decide if you want money or jobs", "Hire a lawyer to try and get you want you want". If you don't feel like you or your technology would reach its potential at MegaCorp, refuse to sell out to them and make your own billions/change the world/improve lives.
I like music
Given that you've started this in the first place, you're almost certainly going to become unhappy with the new corporate environment sooner or later, which means that you're going to come back to this again. The real questions are:
I'd certainly lean towards not taking the offer.
Game! - Where the stick is mightier than the sword!
I've done a lot of startups, and every one of them failed -- and four out of five times, it wasn't for lack of technical excellence.
Getting sales, marketing, and operational execution right is both critical and very difficult. If the buyout offers you enough money you'll be in a better position next time you want to go start your own company -- think very, very hard about accepting the deal.
Make sure the cash is enough you won't need a job for a year or two at least, above and beyond what you just want to blow right now. You should be prepared that in less than six months, you won't want to work there and arrange your finances accordingly.
.. and now the investor owns all rights to the product so other than the originator having a high-paying job for a couple of years he got ... zip.
Personally, I would work out some kind of ongoing royalty situation in addition to the buy out just in case it takes off. Stock options are useless unless it is already a public company and you can exercise them within 6 months.
A friend of mine had a great idea. Got some investors, created a company to develop the hardware and software, started getting customers. Then the economy went south, the investor got scared, and no more money. So no more company.
Oh
I rarely read replies, it's my opinion and if you thought about your opinion a little more, I'm OK with that.
You're asking this on Slashdot rather than seeking professional help, so that tells us something immediately. Sell out to the big company now, ride it as long as you can and leave when it's no longer fun. You don't have the business know-how to run this company on your own and have it survive.
Tired of being "punished" by the Slashdot $rtbl since 2002. I'm now over at http://soylentnews.org/ .
I understand I'm not answering the question, and what I'm about to say isn't exactly "the truth", but more like one way to think about it: there's no way of knowing.
If your forego the Megacorp money, you might complete your product and end up making 100 times as much money. Or your whole project could fall apart in 3 months for reasons that you have no way of anticipating right now. Maybe one of your team will get hit by a car, or fall in love and move to Tokyo.
On the other hand, if you sell to Megacorp, you might end up being able to make your project into everything you envisioned and find fame and fortune through Megacorp's extensive resources. On the other hand, the corporate culture may strangle your soul to the point where you need to quit and check yourself into a mental institution.
There's no right answer here. Without knowing the particulars of what your project is and which Megacorp wants to buy it, the only real advice I can think to give is to think it over and then try to act from hope rather than fear. And keep in mind that if you're fresh out of college, you can probably afford to make a few mistakes, and still have time to start over. Instead of spending all your time afraid of making mistakes, remember that you want to make the best use of your successes and mistakes by learning as much as you can from them.
If you want to do *exactly this* for the rest of your life, say no.
But if you're like most entrepreneurs I know, that's not the case. It's likely that you could take the money, and pursue a new idea, developing another company, new employees, etc... and having some extra money in the bank will make all that a LOT easier.
As somebody who has done a few startups now, I can assure you that money matters. Because more money means you can chase bigger ideas with less pressure.
Agree with cduffy. If they are offering you "car" or "downpayment on a small house" amounts, then you may wish to consider going it alone. But if they are offering you F U money, then think very hard about it. Many best technologies don't succeed, and almost as often, the founders donot get much of it because of dilution or getting forced out by the board or any other number of reasons. If you are looking at over $1M or so going to you, then think very hard about passing it up. Even if the money is less, having experience making and selling a company is a huge gold star to any VC or angel investor for your next company. By the way, if you are really serious, get better advice than /. Talk to VCs, your clients and your advisors or mentors.
As Steve Miller says: "Some people call me Maurice."
No, wait, wrong quote.
As Steve Miller says: "Take the money and run."
Quidquid latine dictum sit, altum sonatur.
Not to mention, if the Mega-Corp likes the idea, they'll find a way to implement it whether or not you are helping them. You may be in the right, but if they want they can get the product cranked out faster and with more developed distribution channels and contacts. More importantly, they can throw more and better experienced lawyers at defending themselves than you can throw at them.
I'll never make that mistake again, reading the experts' opinions. - Feynman
I was in the same situation about 10 years ago (yeah, pre-1.0-burst) so I think I have some insight for you...
First, this is a business question you are asking in a techie forum, bad idea. You are running a business, possibly selling a business, go get yourself some business advisers, at a minimum that means an accountant and a lawyer who know (or at least "get") your industry, and preferably some people who have sold companies in your industry, extra points if they sold to the same megacorp and aren't involved with megacorp any more (they can tell you how it all went, but if they're still there, there's a conflict).
Second, and read carefully: TAKE THE MONEY. There's an old expression: No one ever went broke making a profit.
Caveat: after taxes it should be more money than you'd make in 10 years of working the same "job" at average pay. (e.g. if you're an engineer who could easily pull in $125k/yr, make sure you're landing at least $1.25mm cash after taxes, don't take an all-stock deal - bubbles burst) You need enough money to be able to screw around for a few years if megacorp really does turn you lazy.
BUT don't get sucked into a long term contract working for megacorp. A year or two is ok, and if you're stuck with an earnout, make sure you really can see your company meeting those numbers. After a year you could be itching to leave the megacorp lifestyle (no company is perfect) and its best to know you can part on good terms, pick up and travel for a few months, then start your next awesome company.
Third, can I repeat #1? Find a better place than slashdot to get this sort of advice. If you're really strapped, try your college's career center network, or SCORE (.org)
Actually, sufficient money is exactly what can buy you independence.
If you aren't beholden to anyone or any company for making a living, you can do pretty much as you please as long as its legal.
(Not getting into how enough money will actually often buy you legal leeway too at times.)
Light travels faster than sound. This is why some people appear bright until you hear them speak.........
True: Slavery in all its guises comes to mind.
Everything in the Universe sucks: It's the law!
This is not the slashdot I know and love. Where are all the calls to open source the project for all the eleventy billion reasons that F/OSS is superior in every way imaginable?!!?!?!?
everyone here just telling him to sell.
not flamebait, actually +1 surprised.
The rule is quite simple really. Either they are offering you independence (also known as "f***-you-money"), or they just offer you a glorified salary.
If the offer will truly give you independence (say $1M each?), then take it. You'll be able to start something else just as fun soon enough.
If the offer is $500K to share among 4 people, then I agree with your attitude: it's basically the same as working for a big company and you don't want to do that.
I think they are not offering you enough money.
Think about it. If they were offering you one billion dollars, would you still be asking this question?
If your answer is "yes, I may still be in two minds about selling", then don't sell.
If your answer is "no, I would sell in a heartbeat", then lower that limit, i.e. would you sell for a hundred million? 10 million? 5 million?
Put a price on what you would be willing to sell for without hesitation. Then evaluate the difference between that amount and the offer. If it is less than 25%, sell. If it is over 50%, don't. In between 25% and 50%, I don't know - but may you don't even fall in that window.
And, lastly, do not sell unless you personally stand to make at least $2 million after taxes. Anything less is hardly worth it. Given the fact you have received a buyout offer with no real sales, you obviously have something of value and hence will easily make at least that much on your own.
My 2 cents...
Sometimes a big business or somebody posing as one comes along offering to buy up a small startup company, when in reality they only want to get inside information so they can copy the ideas and technology.
So you really need to find out if these people are actually capable of buying your company for millions (anything less, and by the time you split it up between all of you and take out taxes it won't be worth it), and that they are genuinely interested in buying the company, before you even think about selling it to them. Then if you think they're real, get a lawyer ASAP with experience in these type of deals, and be very careful of how much information you reveal to the buyer.
---------
There is inferior bacteria on the interior of your posterior.
Here are the arguments you made in favor of selling:
The money is fair enough, and the employment conditions would seem excellent, since they would enable us to manage good-sized motivated teams,
Here are the ones you made against selling:
but we are very emotionally attached to our development and we place great importance to being independent. We founded our company because we didn't want to follow rules. We wanted to be the ones who make the rules instead. Money really doesn't mean much to us as long as we can do whatever we want while excelling at our passions. We feel that by accepting the offer, we couldn't achieve the maximum of our potential, and one of us joked that if we get in contact with the corporate environment and accept their money, we risk becoming lazy.
Judging by both the quality and quantity of the arguments in both scenarios, it is pretty clear that you really don't want to sell, and are just pondering the benefits of selling rather than seriously considering it. I can understand this kind of dilemma, but it sounds like you really just want someone to convince you that selling is good or bad rather than actually asking about it. You either want someone to go into a detailed rational response in favor of selling, or a simple emotional one against it.
I say do what you think is right for you and your company, rather than listening to a bunch of random Internet users.
Most important: Decide quickly. Also important: Try to put as little emotion into the process as possible. When you have made your decision, consider the following:
If you decide in favor, make certain the process moves as quickly as possible. Make sure you have put in place -- before taking each and every step -- provisions for backing out (at no cost to you). At the slightest sign of foot-dragging, stop the process and pull out. Decide from the beginning what your triggers will be for backing out. Then stick to the plan.
Being bought out is time-consuming. Think of it as a huge distraction to your business. A huge distraction could be the only thing Magacorp wants to "buy". If they're earnest, they'll understand and appreciate caution as well as haste. (Time is money.)
If you decide against, let Magacorp know immediately. Then get back to work, pronto. Looking back, second thoughts and re-negotiations are distractions, too. Let Megacorp know that your decision is final.
Good luck!
The purpose of a company is to make money. The purpose of a hobby is to have fun and experience personal fulfillment. You need to decide which your organization is.
If it is a company, then you need to decide which path will make the company make more money. But, without knowing the numbers, it sounds to me like a big lump sum now plus jobs from Megacorp, Inc., will probably pay better than hoping that whatever it is that you're developing will someday be a viable product.
And if it is a hobby, then generally, I'd say don't sell. But there may a be reason to. Megacorp, Inc. might be able and willing to supply the development teams that you as an individual and a couple of friends cannot. In this case, by selling out, you could enable your product to be on the market that much sooner.
The first thing to note is that the company has put some effort into making the decision. If they don't get the purchase, that effort will be wasted. ...which means you can make a counteroffer for 10% more and they will probably take it.
(The same thing is true with job offers. The company doesn't want to go back to the interview process, so once they've made an offer to hire you, ask to "think about it" for a day. On the next day, come in and ask for 10% more.)
Next, you should decide what your goals are, and whether it's more important to "feel good" or "be successful".
If your goals are to make tons of money, and you think your project has a good shot at that, then don't take the offer (politely) and keep working.
Otherwise, decide whether it's more important to "feel good" or "be successful".
As an example, people who show up at traffic court wearing jeans and a T-shirt with long unkempt hair usually get short shrift. If asked, they would complain something like "it shouldn't matter how I dress - they should see me for who I really am".
Those people have unclear goals.
If it's important to not get the ticket, then you should do everything you can to make it more likely that the ticket goes away, even if it means getting dressed up in a costume and acting as if you are someone you aren't (read: suit and tie). Dressing to your personal philosophy makes you feel good, but it doesn't accomplish your goals.
So for your situation, you must ask the question: "what are our goals"?
If you are well and truly into "not following rules" and other things, then that's your answer right there.
But remember it's easy, even trivial to start another project and get excited about it, and you can even have your existing dev group together to do it.
If your goals are to have fun and go your own way, selling out now could be a stepping stone to that end.
When the situation is framed clearly, as the traffic court example, most people realize that the fleeting "feel goodness" really isn't all that important to them, compared to the value of achieving their goals.
Have a group meeting, decide what your goals are as a group, and write that down. Your decision will flow naturally from there.
Good luck!
"We can categorically state we have not released man-eating badgers into the area." - UK military spokesman, July 2007
I've worked at two small technology companies (video games, actually) that got bought out by larger corporations.
The wise owner/managers in both cases did this: Work up until required by their contract (1 year in both cases), and leave the next day. The not-so-wise programmers (including me) tried to stick around, make it work, become frustrated, etc.
I now see there's a standard protocol for company buyouts. Step #1 is where big company sends spokesperson on site to give a boilerplate spiel, "We're not changing your working practices; your culture is great, we don't want to change that; etc. etc.". All bullshit. They say that to forestall mass departures, and proceed to make whatever changes they wish, at whatever pace is desirable for them. Now I know: When your small company is bought out, leave ASAP. It's over.
I actually do recommend that you sell and leave ASAP.
We know where leadership by an anti-intellectual "strongman" who scapegoats minorities and likes boisterous rallies goes
Hi,
Thanks for the interesting question. Hope this helps.
The money is fair enough, and the employment conditions would seem excellent, since they would enable us to manage good-sized motivated teams, but we are very emotionally attached to our development and we place great importance to being independent. We founded our company because we didn't want to follow rules. We wanted to be the ones who make the rules instead. Money really doesn't mean much to us as long as we can do whatever we want while excelling at our passions.
I feel you, my friend. I have not been exactly there, but have been in very similar situations. While I don't know your exact situation, I can tell you how I would think about it. What follows is stream-of-consciousness, late on a Friday evening - take it for what it's worth. :)
If my main goal is to do independent development, I would look for paths that get me to that goal while satisfying my other important needs.
Supposing I were a young hot-shot with a belly full of fire, I would feel confident that I could succeed running my own company, working as a unit of a larger company, or trying something else. That last bit is important -- technology, and technology skills, are highly fluid. If you got to where you are, you can probably get there again, given the opportunity.
Mixing those two ideas together, I would start thinking about how to structure the deal with the big company. What would I want to get out of it? Well, if I want to be independent again, preferably while I still have a belly full of fire, I'd want to think about my exit strategy from the parent company. Do they want me to commit to them for some period of time? Are there golden handcuffs that are going to tempt me to stay after I'm ready to leave? A golden parachute if they take the technology and cut me out?
That would lead me to think about how the payout is structured. There will probably be some mix of cash, immediately vesting stock, and stock that vests over time. Suppose you want to leave in one year -- how much of the total payout would you have to sacrifice? Is the parent company willing to shift to more front-loading? How much back end do you have to give up to get more now?
But why go through all that thinking if your intent were to stay with the parent company and see the product through to maturity? It is entirely reasonable to want to see your product grow, and to guide its development. That is a very healthy way to view system engineering.
The reason to think that way anyway is this: If you can work out an exit strategy that you and your friends can agree on, you don't have to worry as much about whether the relationship with the parent company will remain healthy. That future is an unknown, and there are many examples of your sort of situation going well, and just as many of them going poorly. If it works out, that's great! If not, you and your friends can head off on a new adventure together. As long as you have some front-loading and/or short horizon payout, you have a safe way out. That safe path in case things go awry can give you the confidence to join the company.
Also consider it from the big company's perspective: If they are confident that they will be a healthy environment for you and your friends, they should not be too afraid of giving you some front loading to guarantee that you will come out reasonably whole.
At the same time, don't be rude. You don't have to tell them that you're looking for a reasonable exit strategy -- they will understand that. Just discuss the options of front versus back loading, and then talk with your friends in private to discuss whether the range of options includes something you are comfortable with.
And, honestly, I'd lean toward doing the knowledge transfer to the new company and moving on as soon as it was working for them. Make sure you have the right to work together on non-competing projects in the future. Make sure you have the right to develop independent ideas with
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There are certain core ingredients typically required for success:
* Marketing -- finding out if there is a need for a product, creating requirements for a new products based on emerging needs in a market
* Sales -- getting the word out, building relationships and closing deals
* Distribution -- fulfilling orders, positioning goods for easy access and generally getting products into the hands of your customers
* Support -- keeping the brand alive in your customer's mind, keeping the relationship positive and creating secondary opportunities to, say, up-sell or repeat-sell
* Accounting -- getting paid for all of the above, keeping current with accounts payable (esp. taxes) and paying employees and shareholders
* Product Development -- (the easy part) research, design, testing and documentation
* Production -- parts procurement, assembly, verification, bundling and shipping (on time and under budget)
* Human Resources, Legal and Staff -- people named "Peter"
Does you company have all of these in place? If it's missing even two or three components, you may be headed for real trouble. If Megacorp can fill in some of the blanks, consider being bough out a real win-win!
It doesn't sound like they've made you an enormous offer, otherwise you'd be writing this article from your new yacht, right?
Instead, they've made you a sensible offer. Are you at a sensible stage of your life? Do you have commitments and obligations that would suffer if you didn't act sensibly?
If not, don't be afraid to go yourself. Instead, take their interest as a vote for encouragement that your product has serious potential.
Try to raise capital instead of selling out. Offer them a cut as silent partners. Don't be scared if they don't agree initially. Practise your negotiation skills and see if you can't come to a mutually beneficial arrangement.
Perhaps they could take a cut of your business in exchange for funding, office space, access to HR, legal & Financial resources, etc...
The big change in these types of arrangements is that you will have to formalise your processes (read: boring, repetitive, bloated) and start sacrificing some of your product to suit the market. This is not such a bad thing in business and is necessary to allow growth, quality control and delegation.
good luck.
-fodi
... let me tell you that going from a company of 30 to a company of 140,030 is still quite a shock, and the purchase went through nearly 18 months ago.
if you decide to go down this path, make sure that:
1) you have definite set dates for _EVERY_ part of the transition, _especially_ for 401(k)s, health insurance, etc. these dates must be part of the terms of the contract with seriously stiff penalties.
2) take a long, hard look at all your groups' bumps and warts. if you're like my group, you have several excellent tech leads and no project managers. make sure that your potential purchaser can either fix or drastically improve all of your failings.
there's a lot more, but for me the biggest items are those 2.
Yahoo! buys Geocities and turns it into a piece of shit.
Any questions?
Don't listen to any of these armchair socialists. In the real world when someone wants to buy your company you sell. For any amount I might add. Reading your post I guess you are under 30. Sell, sell, sell. Or you will regret it later. You have to look at it this way: your first company is just to proof that you can build a company and sell it. It's like a good grade on your business building CV. Forget about the money. The money is nothing. I hope the big company puts some shares in the deal, or at least options. Shares are good at the moment in this market. The best thing about selling now is that you get an excellent CV. The next time you want to start a company with your track record you can go to any venture capital firm and get enough funding to start a real company with offices, employees etc. Then you sell your second company for the big bucks. After the big bucks you start your third company. This is the company that you keep as it is a combination of a great business idea and work that you really like. So your first company you sell. I am currently doing my third company which you can see here: http://usa.tiouw.com/
Yes there are! Being happy. Healthy. Fulfilled. Having an interesting life. Loving and being loved.
Being rich isn't a prerequisite for any of them - and it doesn't bring any of them on its own.
You don't tell us what the product is, whether it is software or hardware, or something completely different. You don't tell us what kind of money is being offered, or what you think you might be able to make from it, in how many years, if you don't take the deal.
You have pretty much said "I have a business. Somebody wants to buy it. What should I do?"
And there is no answer, given that much information.
If it is a business, it is about money. Otherwise it would be a hobby.
Also if they buy you and employ you, you would be an employee and can be fired. The moment you sell it, it isn't your baby anymore. If there is a potential of big money, perhaps selling is not the way forward, but rather selling part of it. Think Dragons Den.
The advantage for you is that you get the power of the big company. The advantage of the big company is that you still be financialy comited to the product so you will work harder and won't quit if something else comes along.
You also say it is a group of friends. Realize that in the long run working with more then 3 people will be very unlikely and even 2 won't be always easy.
What also could be possible is that the company wants to buy you to put it on a shelf and let you rot there.
Depending how many people are involved, I would look at selling shares and if there are more then 3 friends, sell the whole thing, take the money and then see if the offer to work there is good as an employee. I would realize that I should be making a LOT of money, as I would be one of the experts on the product.
And also look at how the shares are now devided compared to the workload and what ig corp has to offer. Are you all geeks and no sales people? Is everybody developing and nobody reasearching? Is everybody pulling their weight? If the latter is also not true, sell, because it won't change and it will be much more frustrating along the line then now.
And one last word. If you sold it, it isn't yours anymore. It will be Big Corp who owns the next Google or Playboy, although I am sure they will never let it grow that big. What makes things grow big most often is one individual behind it. (Microsoft is an exeption, but that is a marketing company)
Don't fight for your country, if your country does not fight for you.
Getting sales, marketing, and operational execution right is both critical and very difficult.
I'm a business owner and what amazes me, is the amount of time I have to spend selling in order to make some money.
Every time I read about a great idea or a startup, my question is thus:"Sounds great. Who's going to do the sales?" Often followed by silence.
Someone has to go out and tell people how wonderful the product/service is. You're not going to cut it with some Google Adwords because everyone does that.
8 of 13 people found this answer helpful. Did you?
Offer them an exclusive non-compete contract for your services for a fixed term, but you remain a third party to the megacorp. As a contractor to their company you retain your IP, freedom and control of your company.
If they don't take this offer or at least seriously consider this as a plan B, then their plan is evil.
After logging in slashdot still does not take you back to the page you were on. It's been that way for 20 years.
I've lived at Big Fortune-10-types, small mom-and-pop-places, and the medium companies in between. I've worked for myself, I've started companies, and I've closed companies down. Here is what you should consider.
Have you worked in a big corporation before? And for a few years where you're well past the 'new kid on the block, not a threat to anyone, we don't know if he's a maverick or a loyalist but we're worried he might be a slacker yet we don't know' time? Big corporations are populated by people who don't know what to do with mavericks.
Starting your own company is a very big act of non-conformism. You might do it again, they will fear. So you're time there will only be short or you'll be locked into a 'certain level' and promotions (aka bigger money) will be difficult. You'll yearn for the simple days in a small office.
So TAKE THE MONEY, agree to work to transition the new team to the project over 12 to 18 months, set up and train a traditional manager-leader and then gracefully exit. You'll want to get stock options that vest when you exit.
Your responsibility, assuming you did get the big cash, is to put a portion of that money toward starting someone else's startup - just a little seed money to get it going, not so much they get drunk on it, but also enough that you're going to stay interested in their success. Help them along. Teach them what you know.
The next portion of your cash you need to shoe-string your next venture. You should be thinking about what that needs to be while you're transitioning that big company in your old project. And it's old already. Big companies are slow, they think they are fast, but they are not. And if they think your idea is great enough to acquire then you've slipped away from the front of the wave already.
The last part of your cash should be put into a diversified portfolio outside of the companies and markets you work in. Seek a professional wealth manager on how to place those bets relative to your age and needs horizon. This is your safety net.
Then focus on that next idea and the next startup. You did what you did because you couldn't take the boredom of a typical large company. You shouldn't stay in one. I had an early mentor once tell me "When it's not fun anymore, get out of the business" if you've lost your passion you're done.
So negotiate a reasonable price, take the money, get them set up for a smooth transition, and get working hard on that next business startup.
You may be ambassador to England or France. You may like to gamble, you might like to dance. You might be the heavy weight champion of the world. You might be a socialite with a long string of pearls, but you're gonna have to serve somebody. Yes indeed, you're gonna have to serve somebody. Well it may be the devil, or it may be the lord, but you're gonna have to serve somebody.
-- Bob Dylan
I'm gonna need a spec.
The economy is disintegrating, take the money now. You can always give it back later if you feel bad about it.
Let me repeat, the 20th century is over. The dot-com boom is long over. The bubble economy is over. Serious economists are predicting deflation. Sell out while you can. Take the money and let them deal with the problems that will happen if the economy does tank and the market for your currently-popular product goes away.
Let me sum it all up in one three letter word: AOL. Ten years ago, people thought that their stock price was going to continue to grow so big that it would eclipse the entire Time magazine: Warner Bros. studio conglomerate. Now they're just the lingering bad smell of a fart. Can you imagine how bad Steve Case would feel now if he didn't sell out for billions back then when he was more popular than Elvis? AOL is nothing now, but he still has...ALL...THOSE...BILLIONS...OF...DOLLARS.
Sell out now, fool. Why are you even asking us such a silly question? If you sell out and the business is good, you'll still be a company god and get even more money through your stock options and bonuses. If the start-up tanks, you'll still have all the money and you can walk away with none of the problems. Think of your kids. No kids yet? Well then sell out, find a beautiful wife or two and go make a dozen. and don't forget the pre-nup.
If there was a +6 Insightful I'd be happy to mod this one up. Just to add a bit, there can always be one paranoid crazy at MegaCorp who will think that your continued existence is a mortal threat to MegaCorp and that you should be eradicated at any cost (lets face it, Capitalism isn't immune to irrational nut jobs).
On the other side of a aisle is there any way you can protect your self in the event that a raider takes over MegaCorp if their stock plummets? By protect yourself I mean other than taking what cash you have, running and going into a completely different field because you are hog tied by NDAs?
We are very emotionally attached to our development and we place great importance to being independent. We founded our company because we didn't want to follow rules. We wanted to be the ones who make the rules instead. Money really doesn't mean much to us as long as we can do whatever we want while excelling at our passions. We feel that by accepting the offer, we couldn't achieve the maximum of our potential, and one of us joked that if we get in contact with the corporate environment and accept their money, we risk becoming lazy.
If you truly felt that, you wouldn't be asking the question on Slashdot. You'd already have your answer and there'd be no discussion needed.
Your challenge is, like most of us, you've all invested heavily in the underdog culture, come up with a million justifications for why... while no one was offering it... it was much better to do without money, how it was idealistic, etc.
Except now you have been offered money and the very fact you're having to ask puts lie to the concept of absolute belief in those values that were so easy to claim you had when, in truth, they were your only option.
You have both options open to you: You can take the money or you can decline it can keep being the same company. What you need to do is honestly weigh up your feelings and pick whichever is more important to you. But part of honesty is getting over having told yourself you believe something when your actions (in this case having to ask) scream that you haven't bought in to it quite as hard as you want the world, and most likely yourself, to believe.
At the end of the day, it's your call. Slashdot can give you more insight in to the pros and cons of different paths but it's your individual values that have to make the call and, as everyone's values are slightly different, no one on Slashdot can tell you what that ultimate answer is. Just be honest with yourself and accept that, whatever you choose, there'll be bad days when you wish you'd chosen the other but that that is reality and it's OK when it happens.
At some point you need a sales conduit if it's like most products. Developing that will take more people and cash.
THe standard VC process is to give you almost but not quite enough cash to bring the device to fruition but not enough to market it and keep your salaries going while you wait for it to catch fire. Then at that point it's round 2 for cash raising: and this is when you find you need a lot of cash and it's gonna cost you most of your company. Oh and there's one more thing...they'll want you to appoint a director of their choice to watch their money. THis is when you are screwed.
So unless this thing can market it self you gotta know what your path to raising capital is before you decide if you'd rather go corporate.
Some drink at the fountain of knowledge. Others just gargle.
The big question is "should you bank or gamble?" - only you can judge this but trust me - banking is always harder than you think so if you have a real offer then consider it seriously - gambling always feels attractive to people who place bets
And yes - hire an attorney - if you can't afford one then you aren't really playing yet.
Happens to me every year - I own a 3-doctor medical practice in a "monopoly" location, Every so often a large corporate practice chain wants to buy us out.
Consider this: large corporates, as a rule, know how to handle money. If they offer you something, they expect to be able to make a lot more than they will spend. Unless you depend on their resources in order to realize your business plan, that's the money you will miss out on.
But that is only the money part. More important - far more important - is job satisfaction. I have seen many of my colleagues who sold out turn into miserable frustrated sourpots, when prior to the sellout they were happy and satisfied professionals.
My advice - if you seriously believe your business is any good, you like doing what you do, and you don't depend on corporate backing to finish what you started - DO NOT SELL OUT!
I sold my IT business in order to get through studying medicine, and I have seen what happened to those who remained in corporate employ thereafter - not worth it, never worth it.
However, if you realized that your business plans are unrealistic, you are not likely to finalize the project or match your own deadlines, competition is pulling ahead - then of course get rid of it to the highest bidder before they notice these problems too.
You can sell and have a big pay off, however you don't get to walk away. Oh no, no no. You become an employee of Megacorp, and depending on the size of Megacorp, an employee with no power. Megacorp will most likely have a bunch of managers who will call the shots, and you'll have to follow them even if they are 100% wrong. You'll have to put up with that for the next three years while they have the golden handcuffs on you.
Plus everything they promise you will change. A change of direction, and suddenly everything they told you to get you sell is out the window. Megacorp will have all sorts of wonderful policies and procedures for you, like time tracking, horrid ticketing system, an IT department that will force locked down, Window desktops/laptop that belong to a domain (say goodbye to any Mac or Linux desktops), monitored internet, and tons of HR crap like employee ranking, personal development plans, blah, blah, blah. Also they might install badge security and cameras on all your door, so they can track you, if they don't make the entire company move. And if they don't move you, they will entice a few employees to move and grow a local branch and kill your branch via nutrition. Again, you're not sitting on a beach enjoying yourself .. you're writing a daily status report to your new boss that has no idea what you product or company does.
Been through two buy outs, and watched both companies torn to shreds. And watched two boss struggle watching it happen. It's pretty painful to watch people destroy what you spent time to create.
Simply, when you sell, you become their bitch for a few long years. Could you have made it without them?
You think a few million will cover that? I think not.
Of course it will. Get the money, transfer it out of the USA to the Caymans or Luxembourg, and move to a nice beautiful discrete villa on the outskirts of some major city in or near a cocaine-producing country where the blow is cheap. Like say, Lima Peru.
Marry a beautiful young proper landed old-family upper-class girl who likes to have sex and who's family is experiencing a cash flow problem. Learn Spanish, meet your neighbors, learn the local customs, go to local cultural events, have your wife's family and friends teach you all that you need to say and do to be treated respectfully in your newly-adopted country. Go to Mass once or twice a year. Make some noticeable donations to local respected charities. Make a few unnoticeable donations to local police department's widows and orphans fund. Keep up appearances and indulge your appetites discretely. Know your limits but keep expanding them.
Do this and your millions will last a long, long time. Party Hardy, dude.
...if there isn't, or it's quite reasonable, take the money, fulfil the contract, then take the money and go and do the same thing again, but even better next time now you have the capital to avoid cutting (any/as many) corners. Rinse and repeat.
Worked for a former boss/colleague of my acquaintance! Thrice!
...is that if you don't sell, they'll just make it themselves. They have vastly more resources than you do, so they could swamp you unless you get some serious venture capital immediately. But it's cheaper for them to buy you, so they'd rather do that.
The money you could make going it alone is by no means certain, but the money you make by selling is. As long as the terms are such that you're allowed to leave, with the money, and start another company doing something similar (they'll probably have a non-compete for something identical), you get to keep the freedom and start over with more resources.
Many entrepreneurs go through this cycle several times, building their experience and their resources until they reach the point where they can raise the kind of venture capital that allows them to become the megacorp themselves. Sometimes they enjoy being on top, and sometimes they avail themselves of the freedom to do whatever they want, and go on to start more successful companies.
Personally, I'd sell out, as long as the terms gave me plenty of freedom. You might even enjoy working at the megacorp. Some of them have very healthy cultures.
There's no failure quite as dissatisfying as a complete and total solution to the wrong problem.
That's what poor people like to tell themselves, but it's not really true -- rich people are, in the aggregate, happier than poor people. Being rich doesn't make you happy per se, but it can sure help you avoid a lot of the things that make you unhappy. And there's no reason to believe that being rich makes any of that happy-generating life events more difficult or less likely.
Not really - how much money you have is an important variable in the equation of how much time and resources you have to do the other things that you consider important. He didn't say that it was the most important, just that it's up there. Anyone who has to work 2 or 3 jobs just to keep their family surviving would probably agree that money is very important. It's only those who make enough that they don't have to worry about money that consider it unimportant.
which is totally what she said
This is the business school version of a Penthouse Forum story.
You are welcome on my lawn.
Having worked as a guidance counsellor, social worker, and community organizer, I can state with absolute 100% certainty and authority that this statement is entirely bullshit.
If you have paid off the mortgage on a house in a suburb with a good school or have retired to somewhere rural with more space and lower property taxes, have enough savings where the interest can be used to pay off the loan on a new or slightly used car, the food and utility bills, and you have still have enough left to do whatever you have always wanted to do (timelapse photography, video editing), then money does buy you independence.
I've seen many people do this, from engineers who had a steady career with large corporations, and took the option of early retirement when the companies downsized, to company directors who sold the company off to a mega-corp, and then formed their own startup.
But if you are wanting to continue running your company your way, the investment from megacorp is going to come with a catch; maybe the product manager responsible for that area will start making demands such as wanting the most qualified staff working on a particular aspect of the project, or using particular development tools or methodologies (to showcase their technology).
Vintage computer adverts: http://www.vintageadbrowser.com/computers-and-software-ads
Perfect answer.
Just make sure you get paid in cash. Not stock or deferred earnings.
Be sure to buy something from http://www.zerohalliburton.com/business/aluminum.jsp and bring it to the closing to hold all the cash.
Dave Barnes 9 breweries within walking distance of my house
You're in luck! I'm available for hire right now!
Peter
Downsize DC Today!
I didn't say it was the MOST important, although a lot of people seem to be reading that.
"What a sad, sad outlook on life."
You know what else is sad? Not being able to afford healthcare. I guarantee that you won't be happy if you don't have enough money. Is money the solution to all the world's problems? Hell no. But it sure solves a lot of the ones that get in the way of happiness, that's for sure.
I'm a gamer geek. Have been all my life, and I'm in my 40's. I went to college, got a degree, got a job. Most of my crew I grew up with didn't. I am relatively wealthy compared to those guys. I have a new car, my house is paid off.
Most of my friends though aren't nearly where I'm at. They're in their 40's too, but they bag groceries and work gas stations. And can't afford simple things I take for granted, like healthcare.
I watched one friend float a check for some food at a grocery story for $1.26.
Now, I'm no expert on happiness - but being able to buy food when I need it, cover my family's healthcare, and enjoy a new car makes me far happier than those guys.
In short, money doesn't buy happiness, but not having enough can definitely keep you from being happy.
So I stand by my original statement. I'm not rich, but being rich definitely would not suck. 99% of the trouble you'll get into in this world stems from a lack of money, IMO. Speeding tickets, bills, debt, food, healthcare...
Being rich eliminates an entire class of problems from your life. And most of the people I know are so preoccupied with this class of problems that most of the joy you can get from living is unavailable to them. They're too busy trying to make rent. I'm doing well, and I am much happier than most of those guys. I have hobbies, my family is healthy and well fed, I don't have to worry about eviction or what the hell I'm going to do when the next rent comes due.
I'm sure there's a point of diminishing returns, too. It is probably possible to be so wealthy you're perpetually bored. But I wouldn't be, that's for sure. I have a dozen projects I'd spend my time on if I didn't have to have a job. So again, my happiness would be increased with more money. If you play it right, money == freedom, and you can never have enough of that.
Weaselmancer
rediculous.
Right. There's poverty and there's poverty.
I've just got back from Ethiopia. I don't need to tell you what a poor country that is. Millions and millions of people there have fuck all, and in their eyes I'm rich beyond their wildest dreams. It pulled me up sharp when I realised that I could make in a day's freelancing what somebody in a reasonably good job - a junior teacher, say - could make in a year. I don't mean that to sound boastful - I can make a more than reasonable amount of money doing what I do, but the point is not how much I make, but how little they do.
Kebede was the caretaker-cum-security guard of the place where I was staying. His job basically consisted of hanging around and opening the gate when one of us went through it. He was there round the clock, every single day. He slept on a bed directly above a squat toilet in a shed made from shipping containers. No heating, and Addis Ababa can get much chillier than you'd probably imagine at night. I wouldn't have kept my fucking dog in the conditions this guy had to live in. I never got to ask him, because neither his English nor my Amharic was up to it, but I'd bet he counted himself relatively fortunate.
And you know what? In a way I'd rather be him, or a subsistence farmer scraping by on $100 per annum, than the aforementioned poor bastard who has to work three shifts on minimum wage, praying the car they drive to work doesn't break down because they can't afford to fix it, just to keep their kids in shoes.
There's a particularly insidious kind of poverty that's prevalent in the US and to a lesser extent in many other developed countries that would just make you want to cry. It really traps people, steals their time, steals their health, just so they can keep their heads barely above water. The many, many Ethiopian people I met who have literally nothing more than the shirt on their backs are in some ways more fortunate, because they never expect to have anything and live in a society which is geared up to cope under these circumstances. America's a very, very difficult place to be poor.